Asia presents huge developmental potential for Islamic finance and is likely to be the main driver of Islamic banking growth in the near future given the untapped potential in India, Bangladesh and Indonesia, according to a report. Islamic finance can be utilised for greater integration of financial markets with the real economy and for improvement of the economic balance between emerging and frontier markets, according to Kuwait Finance House Group report. Islamic banking is banking that is consistent with the principles of Sharia which prohibits acceptance of specific interest or fees for loans of money.
Economic instability and legal obstacles have slowed the introduction of modern forms of Islamic finance in Afghanistan. But sharia-compliant loans are beginning to play a role in the farm sector through a U.S.-funded aid programme.
The Afghan government is using Islamic financial contracts to extend credit to farmers in areas where conventional banking has not fully satisfied demand for funds.
AlHuda Centre of Islamic Banking & Economics (CIBE) and AKHUWAT are organizing International Conference on Islamic Microfinance on June 13, 2011 at Faisal Auditorium Islamabad wherein delegates from 12 countries will grace the occasion and 800 participants will attend this mega event. The aim of this conference is to choke out the plan of poverty alleviation on national and international scale to lessen poverty, social welfare and to tackle other problems pertaining to it.
Senegal, Pakistan and Afghanistan, among the world’s 50 poorest nations, are turning to Islamic banking to spur economic growth by encouraging people to take out loans and open savings accounts.
Outstanding domestic bank lending accounted for 3.5 percent of Afghanistan’s gross domestic product in 2008, 25 percent in Senegal, 27 percent in Nigeria and 46 percent in Pakistan, according to data compiled by the World Bank. The rates compare with 224 percent in the U.S. and 115 percent in Malaysia, a global hub for finance that conforms with Shariah principles.
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